For Microsoft, Nokia's Phones Are 'Key To Everything'

That's a Nokia Lumia 820 smartphone snapping an image of a Windows icon.

Dado Ruvic Reuters/Landov

Originally published on September 3, 2013 11:52 am

Here's why Microsoft says its $7.2 billion deal to buy Nokia's smartphone business as well as that company's patents and services makes sense.

"It all starts with the phone," writes PCWorld, in a piece that analyzes why "the phone is key to everything."

According to the magazine:

"In its 'strategic rationale' explaining the deal, slide 15 of Microsoft's presentation makes the case that the foundation for Windows PCs begins with Windows Phone. ... 'Windows: 300M+ devices a year,' the slide notes. 'Success in phone is important to success in tablets. Success in tablets will help PCs.' "

"Microsoft had little choice. Nokia controlled Windows Phone distribution and the companies were so integrated they might as well be one unit. With Nokia, Microsoft can now put Windows Phone on low-end devices to gain share."

"I'm not predicting disaster. It would be fun if it led to a golden age of Windows smartphones, and good for consumers. But I can't think of any past examples of anything similar happening and turning out well. (Let's not even bring up HP's acquisition of Palm. Oops! Just did.) ...

"Then again, this deal doesn't necessarily need to change everything to be worth a try. Microsoft has plenty of cash, and the cash it's paying Nokia consists of overseas profits which it wouldn't otherwise bring home to the U.S. for tax reasons. Windows Phone is currently a struggling number three in the smartphone platform wars; if it ends up a healthy, competitive number three, Microsoft might be happy it spent the money.

"In other words: If the deal ends up looking even modestly successful, it'll have beaten the historic odds."